JUDGMENT - P.B. SAWANT, J.:---This is a petition under Arts. 226 and 227 of the Constitution of India, challenging the order dated 21-11-1975 passed by the Commissioner, Poona Division, in Election Petition No. COP-81(44). The Election to the Board of Directors of Respondent No. 2---Kolhapur District Central Co-operative Bank Ltd., was to be held on 20-11-1973 and the results thereof were to be declared on 30-11-1973. The nomination papers were to be filed on or before 20-10-1973. The petitioner and respondent No. 1 were the two contesting candidates for one of the posts of Directors from the constituency known as Gat No. 1 Vibhag No. 9 of Karvir which was the constituency composed of the Co-operative Societies in the Karvir Taluka. Respondent No. 1 having secured larger number of votes than the petitioner, he was declared elected on 30-11-1973. Thereafter the petitioner filed an election petition under section 144-E of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as the said Act) before the Divisional Commissioner, Poona. The petitioner challenged the election of respondent No. 1 on the ground that respondent No. 1 was disqualified for being elected as a Director of respondent No. 2-Bank since he was a defaulter in the payment of dues to the respondent No. 2-Bank within the meaning of Rule 58 of the Maharashtra Co-operative Societies Rules, 1961 (hereinafter referred to as the said Rules) made under the said Act. The case of the petitioner in this connection was that respondent No. 1 was one of the Directors of Mahatma Jotirao Gul and Khandsari Sahakari Utpadak Co-operative Society Ltd., (hereinafter referred to as the Khandsari Society). The said society had taken loans from respondent No. 2-Bank as follows : (1) Loan of Rs. 1,00,000/- was taken on the same day which was to be paid on or before 31-1-1970. (2) another loan of Rs. 6,00,000/- was taken on the same day which was to be paid within five years in equal yearly instalments, and (3) still another loan of Rs. 9,00,000/- was taken on the same day which was to be paid within a period of five years in equal yearly instalments. Neither the loan of Rs. (2) another loan of Rs. 6,00,000/- was taken on the same day which was to be paid within five years in equal yearly instalments, and (3) still another loan of Rs. 9,00,000/- was taken on the same day which was to be paid within a period of five years in equal yearly instalments. Neither the loan of Rs. 1,00,000/- which was to be paid on or before 31-1-1970 nor the instalments of the other two loans which were due and had become payable before the date of nomination, viz., 23-10-1973 were admittedly paid by the said Khandsari Society to respondent No. 2-Bank. It was further the case of the petitioner that respondent No. 1 along with other Directors had executed two documents viz., a continuing guarantee bond and a promissory note giving their personal security for the repayment of each of the said loans. That being so, respondent No. 1 was personally liable jointly and severally along with other Directors as well as the Khandsari Society to repay the said loans and the instalments thereof as the case may be to respondent No. 2-Bank. The said loans or the instalments thereof having informed unpaid, respondent No. 1 had become personally defaulter within the meaning of Rule 58 of the said Rules. It may be mentioned that in this connection the petitioner had also referred to the arbitration proceedings being ABN/838 of 1972-73 adopted by respondent No. 2-Bank on 3-5-1973 against Khandsari Society and the Director of the said society including respondent No. 1 for the recovery of the amount due under the said three loans. The total amount sought to be recovered from the defendants in those proceedings was Rs. 6,97,813.30. The Arbitrator had passed his award in those proceedings on 10-2-1974 which is (Ex. B) to the present petition. Against the said award there were three appeals filed, one by the Society, another by the Directors including respondent No. 1 and the third by respondent No. 2-Bank. All the said appeals were heard together and a consent order was passed by the Appellate Court viz. the Maharashtra State Co-operative Tribunal on 22-9-1975. As per award passed by the Arbitrator on 10-2-1974, the Arbitrator had come to the conclusion that the defendants-Directors of the Khandsari Society were jointly and several by liable for the suit claim. All the said appeals were heard together and a consent order was passed by the Appellate Court viz. the Maharashtra State Co-operative Tribunal on 22-9-1975. As per award passed by the Arbitrator on 10-2-1974, the Arbitrator had come to the conclusion that the defendants-Directors of the Khandsari Society were jointly and several by liable for the suit claim. However, while passing the operative order, the Arbitrator had directed respondent No. 2-Bank to recover the amount due by way of attachment and sale of the mortgaged property of the said Khandsari Society and if any arrears still remained due, then the same were to be recovered from the Directors of the said Society including respondent No. 1. The consent order passed by the Tribunal on 22-9-1975 in terms stated that the Directors including respondent No. 1 conceded the claim of respondent No. 2-Bank. They also accepted their liability to pay the amount due to the Bank. However, it was further provided that the said amount which came to Rs. 8.26 lakhs, would be paid to the respondent No. 2-Bank by five instalments mentioned in the consent order. It was also provided in the said consent terms that the Directors would be individually liable to the respondent No. 1 to the extent of Rs. 2,00,000/- out of the total amount of Rs. 8.26 lakhs and that they would be absolved from their individual liability on satisfaction by the Khandsari Society of the first instalment of Rs. 2,00,000/- due and payable under the earlier terms of the consent order on 31-12-1975. Relying on the original liability as evidenced by the two documents of the continuing guarantee bond and the promissory note as confirmed by the aforesaid orders passed in the arbitration proceedings, it was contended before the Divisional Commissioner that respondent No. 1 was disqualified to be the Director of respondent No. 2-Bank. The Divisional Commissioner, however, came to the conclusion that the liability of respondent No. 1 would arise only if there was a failure on the part of the said Khandsari Society to make the payments of the first instalment before 31.12.1975 due under the award as directed by the final consent terms passed by the Co-operative Tribunal on 22-9-1975. In that view of the matter, he held that respondent No. 1 was not a defaulter within the meaning or Rule 58 of the said Rules. In that view of the matter, he held that respondent No. 1 was not a defaulter within the meaning or Rule 58 of the said Rules. He, therefore, dismissed the election petition of the petitioner by his order dated 21-11-1975 which is the subject-matter of challenge in the present petition. Before we proceed to deal with the contention raised by Mr. Rane appearing for respondent No. 1, it will be necessary to re-produce here the relevant portions of section 144-E of the said Act and of Rule 58 of the said Rules. "144-E(1) A person shall be disqualified for being elected as and for being a member, of the Committee of any specified Society--- (a) ... ... (b) ... ... (c) ... ... (d) ... ... (e) if he is so disqualified by or under nay other provisions of this Act". 58. Disqualification for membership of Committee.---(1) No person shall be eligible for appointment or election as a member of the committee of a Society, if (a) he is in default to any Society in respect of any dues from him, either as a borrows or as surety for such period as is specified in this behalf in the bye-laws of the concerned Society, or for a period exceeding three months, whichever is less, or xx xx xx xx xx xx There is no dispute that there is no bye-law of the respondent No. 2-Bank laying down the period referred to in sub-clause (a) of the Rule 58. Therefore, in the present case the liability would arise after the expiration of the period of three months from the date on which the re-payment of the loans and/or their instalments were due to the respondent No. 2-Bank. There is no dispute that such a liability within the meaning of sub-clause (a) of Rule 58 did exist on the date of the filing of the nomination. It is therefore, obvious on the facts stated earlier that respondent No. 1 having taken personal liability to make good the payment due from the Khandsari Society to respondent No. 2-Bank, was a defaulter within the meaning of the aforesaid rule on the date of filing of his nomination paper in the present election. The contention advanced by Mr. It is therefore, obvious on the facts stated earlier that respondent No. 1 having taken personal liability to make good the payment due from the Khandsari Society to respondent No. 2-Bank, was a defaulter within the meaning of the aforesaid rule on the date of filing of his nomination paper in the present election. The contention advanced by Mr. Rane however was that as per the direction given by the Arbitrator in his award dated 10-2-1974, the liability of respondent No. 1 was to arise only if the said Khandsari Society had failed to make the payment first or if the realisation of the amount from its property mortgaged to the respondent No. 2-Bank, were to fall short of the amount due. Since on the date of the filing of the nomination papers, it was not proved that the said Khandsari Society had failed to make the payment as directed in the award or that its assets fell short to make good the said payment, there was non-liability attached to respondent No. 1 on that date or even on a subsequent date till 31-12-1975 and he was, therefore, not a defaulter within the meaning of the said rule. In this connection he also pointed out the relevant provisions of the consent terms which we have referred to earlier. On the basis of the said consent terms he also argued that it was the said Khandisari Society which was primarily liable for payment of the dues. The said payments were to be made to be made by five instalments. The liability of respondent No. 1 along with other Directors was confined only to the amount of Rs. 2,00,000/-out of the said total amount and the said liability would arise only if there was a failure on the part of Khandesari Society to make the payment of the first instalment. Mr. Rane, therefore, strenueously urged that in the circumstances, it was not proved that respondent No. 1 was defaulter within the meaning of the said Rule. We are unable to appreciating this contention. There is non dispute that the two documents viz. the continuing guarantee bond and the promissory note were executed in respect for each of the loan transactions by respondent No. 1 along with other Directors. We are unable to appreciating this contention. There is non dispute that the two documents viz. the continuing guarantee bond and the promissory note were executed in respect for each of the loan transactions by respondent No. 1 along with other Directors. The said two documents show that respondent No. 1 along with others had offered their personal security to the respondent No. 2-Bank for the re-payment of all the said loan amounts. There is also further no dispute that neither of the said loans or the instalments due under the said loan transaction were paid and on the date of the nomination, the amount had become over-due to the respondent No. 2-Bank. Thus the primary liability of the respondent No. 1 was on the basis of the said two documents and it can not be doubted that the amounts for which respondent No. 1 had offered his personal security, were due to respondent No. 2-Bank and inasmuch as there was a default in the payment thereof, he had become a defaulter within the meaning of the said rule. It is really unnecessary to refer in this connection to the arbitration proceedings adopted by respondent No. 2-Bank, save and except for the fact that even in those arbitration proceedings, the authorities had come to the conclusion that respondent No. 1 along with others was jointly and severally liable to the respondent No. 2-Bank. As has already been pointed out, the arbitrator had come to the conclusion that the respondent No. 1 along with others was jointly and severally liable to the respondent No. 2-Bank. All that happened when the Arbitrator made his operative order was that he laid down a certain mode for the recovery of the amount due from the said Khandsari Society and the other defendants viz. the Directors including respondent No. 1. It is in this order of the recovery of the amount, that he had directed that of first the amount should be recovered from the assets of the Society and if there was a balance due, then it should be recovered form the Directors including respodent No. 1. This did not in any way detract from the liability of respondent No. 1 to respondent No. 2- Bank. The consent order passed in the Appellate Court also does not help respondent No. 1 in this connection. This did not in any way detract from the liability of respondent No. 1 to respondent No. 2- Bank. The consent order passed in the Appellate Court also does not help respondent No. 1 in this connection. Even accepting the fact that by the said consent terms, respondent No. 1s liability was confined to the amount of Rs. 2.00,000/- only and he was to pay the same, along with his co-directors, only if the Khandsari Society had failed to pay the first instalment on or before 31-12-1975, that does not make him a non-defaulter within the meaning of the said rule. We are therefore, unable to appreciate the contention advanced by Mr. Rane that respondent No. 1 was not liable for the loan due from the said Khandsari Society to respondent No. 2-Bank or that his liability was to arise only after the Khandsari Society had failed to make payment or the assets of the said Society fell short for making up the amount due under the award. We are therefore of the view that respondent No. 1 was defaulter within the meaning of the said rule and therefore he was disqualified for being elected as a Director of respondent No. 2-Bank in the election in question. The learned Divisional Commissioner obviously lost sight of the aforesaid aspects of the matter and had proceeded on a wrong basis. We, therefore, set aside the impugned decision of the Divisional Commissioner and allow the election petition and declare that the election of the respondent No. 1 as a Director of respondent No. 2-Bank was illegal and void. Since the petitioner was the only other contesting candidate and it is not shown that he suffers from any disqualification, as a consequence of the setting aside of the election of respondent No. 1, the petitioner will have to be declared as being elected as a Director in place of respondent No. 1 to the Board of Directors of respondent No. 2-Bank. We therefore declare accordingly. Rule is accordingly made absolute with cost against respondent No. 1 only. -----